Why We Need to be Teaching Money and Budgeting Skills to Students Now

Education pays. On average graduates will earn more than £4000 per year more than there non professional salaried friends. What’s more is that the earning gap will continue to grow as graduates accelerate up the career and earnings ladder. The highest paying jobs go to bankers and brokers which is no surprise to many.

Other high paying jobs were announced after the ONS published the annual findings and this included pilots and medical practitioners. This another reason to encourage our children to choose STEM subjects at school. Jobs requiring those skills are set to further increase over the coming years.

However continuing education into University is expensive and we don’t spend enough time teaching money skills to teenagers. I wrote last week about the real cost of university now that we are looking at how much our daughter going to uni will cost us financially.

The Money Advice Service’s Young People and Credit report revealed 37% of 18 to 24 year olds currently hold one or more credit card, an overdraft or other form of borrowing, owing a combined average of £2,989. 37% say they do not have a plan in place to repay the money they currently owe and 10% of the group says they’ve missed at least one payment in the last 12 months.

It is a worrying trend that more and more students are struggling financially. A degree is a full time course and whilst lectures and seminars may only take up 10-15 hours a week, students also need to study independantly. Many students have been forced to work alongside their studies.

Did you know:

43% of students are using their overdraft, 12% have signed up to a credit card and 2% use a student loan to supplement their student loan

Nearly a third of 16-24 year olds have financial debts of more than 40% of their income

37% of 18 to 24 year olds currently hold one or more credit card, an overdraft or other form of borrowing, owing a combined average of £2,989

Obtaining credit is a good thing to help improve a credit file, but managing that debt is key

“We think it’s vital that the UK finance sector gets onboard the Get Smart About Credit initiative, promoting awareness about the issue of young people and debt,” Pete Mugleston, Director at Online Mortgage Advisor said. “Working with banks, credit agencies, educators and other big players in the finance space is necessary in order to stamp out debt for young people.”

Teaching Money Skills

To support students, the Online Mortage Advisor’s credit awareness campaign covers mortgage credit builder tips, money saving tips and a comparison chart depicting what you are likely to earn once you have graduated. This will help teenagers and young people understand why we need to teach money skills.

“Although teaching young people about managing money became part of the national curriculum in 2013, it’s clear more needs to be done to help young people realise the potential damaging effects of getting into debt,” Mugleston added.

“We think it’s vital that the UK finance sector gets onboard the Get Smart About Credit initiative, promoting awareness about the issue of young people and debt. Working with banks, credit agencies, educators and other big players in the finance space is necessary in order to stamp out debt for young people.”

Online Mortgage Advisor is encouraging everyone to share their #topmoneytip across social media, in the hope it’ll help students and young people avoid getting into debt. What would your tip be, do join the hashtag and let us know.

It worrying that debt is building at such a young age and this will negaively impact on an individuals future. Therefore parents and educators need to work together to teach these life skills.

My tip I would give to students is to investigate what grants or sponsorships they could apply for. We recently found out about sports schlorships for example and we are persuing this option for our hockey playing teen. Finding grants is time consuming but their is also an app to help. GrantFairy is a mobile app which gives students access to over 4,000 grants, bursaries and scholarships to help fund their university tuition fees and living expenses.

University and gaining a degree improves life chances and although the system now runs on loans, these loans are designed to be paid back as the graduates improve their earnings. University is still worth the expense in my view but managing the finances is important and teaching money and budgeting needs to be priortised by educators, financially insitutions and also by parents.